Buying A Foreclosure in Sumter, SC Part 6 - Breaking Even

Posted By Kim PeasleyParker @ Jan 10th 2014 12:00am In: Sumter SC Foreclosures

Orginally Posted on ActiveRain.com by Kim Peasley-Parker

Buying a Foreclosed Home in Sumter, SC Part 6

Breaking Even, Making Money or Having Instant Equity

 

In the last post about buying foreclosed property in Sumter, SC, I wrote about the most common reasons buyers purchase a foreclosed home.  The “flipper” is normally the investor who wants to buy the property at the lowest price possible and then make improvements and sell for the highest price possible.  The “owner occupant” and the “investor” are two buyers that are still looking for a good deal, but they are not as concerned with making the necessary repairs and improvements and reselling the house as quickly as possible.  They realize their strategy is to purchase the property and then have some instant equity in the property or build equity over time. 

 

Using the reason for buying the property will determine what the buyer is willing to pay.  Below is a run down of the typical costs for purchasing a foreclosed home and using the repaired property value to drive the purchase price.

 

Expense or Item

Cost

Value of Improved Property

 

Repairs Needed

-

Closing Costs to Purchase

-

Closing Costs of Sale

-

Holding Costs

­-

Profit or Equity Wanted

-

Purchase Price to Support Goals

=

 

Repairs needed, closing costs to purchase, closing costs to sell, holding costs (insurance, taxes, and utilities), profit or equity wanted would all be subtracted from the full resale value of the home to determine the price a buyer would be willing to pay for the property.  A Realtor® can assist you in determining the full resale value of a property.  A buyer will quickly learn based upon what a foreclosure is priced for what the condition of the property and the intent.  Many owner occupants want to finance a property and find they have to have the property meet certain criteria of their lender in order to purchase it with financing.  Many investors use their own money or others to purchase the property with cash or they do personal loans from a lender which means the property doesn’t have to meet mortgage requirements. 

 

For more information about or help in calculating these numbers, please feel free to call me at 803-840-7519. 

 

Buying a Foreclosed Home in Sumter, SC is an ongoing series of posts, where I am purchasing a foreclosed property to turn into a rental income property.  Follow the posts below to experience the entire process with me. 

 


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